NECESSITY, FUNCTION, AND CONFORMITY: KRS
216B.040(2)(a)1 requires the Cabinet for Health and Family Services to
administer Kentucky's Certificate of Need Program and to promulgate
administrative regulations as necessary for the program. KRS 216B.061(4)
requires the cabinet to establish the requirements for administrative escalations.
This administrative regulation establishes the requirements for administrative
escalation necessary for the orderly administration of the Certificate of Need
Program.

Section 1. Definitions. (1)
"Administrative escalation" means an approval from the cabinet to
increase the capital expenditure authorized on a previously issued certificate
of need.

(2) "Cabinet" is defined by KRS
216B.015(5).

Section 2. Administrative Escalations.
(1) A person shall not obligate a capital expenditure in excess of the amount authorized
by an existing certificate of need unless the person has received an
administrative escalation or an additional certificate of need from the cabinet.

(2) Requests for administrative
escalations shall be submitted to the cabinet on the OHP - Form 6, Cost
Escalation Form, incorporated by reference in 900 KAR 6:055.

(3) The cabinet shall authorize
administrative escalations for funds that have not been obligated and which do
not exceed the following limits if there is not a substantial change in the
project:

(a) $100,000, if the capital expenditure
authorized on the certificate of need is less than $500,000;

(b) Twenty (20) percent of the capital
expenditure if the capital expenditure authorized on the certificate of need is
$500,0000 to $4,999,999;

(c) Ten (10) percent of the amount in
excess of $5,000,000, plus $1,000,000, for projects if the capital expenditure
authorized on the certificate of need is $5,000,000 to $24,999,999;

(d) Five (5) percent of the amount in
excess of $25,000,000, plus $3,000,000, if the capital expenditure authorized
on the certificate of need is $25,000,000 to $49,999,999; and

(e) Two (2) percent of the amount in
excess of $50,000,000, plus $4,250,000, if the capital expenditure authorized
on the certificate of need is $50,000,000 or more.

(4) If an administrative escalation is
authorized, the certificate of need holder shall submit any additional
certificate of need application fee required by the increased capital expenditure
pursuant to 900 KAR 6:020.

(5) The escalation of a capital
expenditure in excess of the limits set forth in subsection (3) of this section
shall:

(a) Constitute a substantial change in a
project; and

(b) Require a certificate of need
pursuant to KRS 216B.061(1)(e).

(6) The unauthorized obligation of a
capital expenditure in excess of the amount authorized on a certificate of need
shall be: